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Pre employment screening: an anti-fraud tool
Fraud has become one of the greatest threats to corporations and organisations over the past decade. Forensic fraud investigators are often deployed to uncover fraudulent activity after suspicions are raised or a tip-off. Though estimates for the totals amount defrauded from corporations, institutions and governments vary wildly, they all agree on one point; the frequency and quantity of loss to fraud is increasing. One of the best estimates is conducted by the Association of Certified Fraud Examiners (ACFE) which calculates that U.S. organisations lose an estimated 7 percent of annual revenues to fraud - a staggering estimate of around US$994 billion for U.S. organisations in 2008.
Various surveys conducted by international accounting firms over the past 5 years have found that one of the best ways to combat fraud is to hire the most honest, qualified and experienced personnel available. This reduces the chances of hiring current or potential fraudsters and sets a minimum level of quality and ability for personnel hired. Intellisec believes the most effective way to do this is to perform pre-employment screening on all prospective hires, contractors and interns prior to engaging them.
What is PES?
PES is the abbreviation commonly used for `Pre Employment Screening’. PES generally refers to the method whereby a prospective employer arranges for information relating to a potential candidate or contractor to be checked and verified to confirm suitability for employment and whether they have a criminal record / history of being involved in dishonest activities.
Broader use of PES?
PES provides an assessment as to the potential candidate’s capacity and capability to undertake the duties & responsibilities of their new role in the organisation – matching the recruited personnel’s qualifications and experience with the demands of their new role.
Which companies or institutions use PES?
Some companies are required to undertake mandatory PES, such as banks and insurance companies. The military and law enforcement have a rigorous PES program to ensure recruits are suitable and not tainted by previous criminal or aberrant activity. State and Federal agencies use PES, as do not for profit organisations
Isn’t PES a method used to `catch people out?’
This is a common misconception. PES is directed at verifying the potential candidate’s claimed attributes and highlighting any inconsistencies between what is stated and that found during the PES process.
So how does PES work?
The general approach is to have potential candidate supply information which relates directly to their employment such as education attainment, working history, references from previous employers etc. This information is usually supplied by completing a set form and supplying copies of degrees etc. Then, contact is made with the relevant education intuitions [universities, colleges, high schools etc], employers and references to ascertain whether the claims made by the candidate are accurate and valid. A report is usually compiled detailing these findings and submitted to the potential employer or organisation.
Is consent from the potential candidate required?
In many countries, written consent from the candidate is required before these PES checks can be undertaken. However, some general background checks can be performed in the US and other countries without such consent.
What other kinds of things can be checked or performed?
There are a variety of other direct checks which can be undertaken for a candidate, including:
- Record of directorships in companies
- Bankruptcy record
- Civil litigation history
- Criminal record
- Previous employment undertaken
- Education qualifications
How flexible is PES?
PES is as flexible as the requesting company or organisation wants it to be. A transportation company would think it crucial to confirm that a prospective driver has a clean driving licence, whilst a company hiring someone to work as legal secretary may consider such a check unnecessary. A good PES firm will advise what checks are material to the position which the candidate is being recruited for
How far back does a PES check go?
Generally a PES check goes back between 5 and 10 years for previous employment whereas records such as bankruptcy and civil litigation can go back 20 years or more. With employee turnover increasing in most industries and companies merging or being bought out, employment records can be difficult to obtain for periods longer than 10 years prior
How long does PES check take?
The precise time will vary depending on the number of areas to be verified, the time line [5 or 10 years], the number of jurisdictions to be covered and the type of checks. Generally, an initial report can be completed within a few days but checks like criminal record history can take longer
But don’t recruitment agencies do PES?
Not really. Some recruitment agencies do basic background checks to corroborate the candidate’s history but few recruitment agencies conduct thorough PES. Recruitment agencies are looking to fill a vacancy and focus on selecting a candidate. The agencies which seek to fill higher positions such as CFO do a better job but still rarely go through a full PES process
What are the downsides to PES?
Very few. Other than having to pay the fees for PES and the slight delay between selecting a candidate and having them confirmed as being suitable. However, the risks and costs when hiring the wrong person are considerable - wasting good money on the recruitment and training of the person, costs and difficulties with terminating the employment of unsuitable employees, upsetting the equilibrium within your organisation, hiring a potential fraudster or convicted criminal, exposing the organisation to possible losses or litigation by an aggrieved party are just some of the potential issues with hiring without undertaking PES.
